Younten Tshedup | Gelephu

Despite efforts to substitute import with local products, manufacturers in the country are dying a slow death.

Business is worst among the local manufacturers of construction materials. Market, even within the country remains limited with people importing almost every material from outside.

Even as the government plans to fast track the establishment of industrial parks, local manufacturers, the primary clients of the facility are uncertain of its future.


The issue

There is lack of confidence on local products, especially the construction materials among Bhutanese.

People are seen importing the same construction materials produced by Bhutanese manufacturers from dealers outside the country.

Phuntsho Tenzin of Thongleg Wire Industries in Motanga industrial park in Samdrupjongkhar said that Bhutanese are reluctant to buy the wire nails his factory produces citing higher cost.

However, he said that people buy the same nail, which he exports to Assam by paying a higher price. It’s the same wire nail, which costs Nu 50 a kg within the country. People pay around Nu 50 to 52 per kg and an additional of 10 percent sales tax (BST) on the purchase from Assam.

“There is this blind notion among the Bhutanese that Indian products are of better quality and comes at a cheaper rate, which is not true,” he said.

 “They do not even come and consult us about the prices and assume themselves.”

Phuntsho Tenzin explained that the local construction materials are comparatively cheaper than the imported items. He said that the cost of production within the country is far lesser mainly because there is no GST levied on the import of raw materials and from the tax holiday the government provides to local manufacturers.

He said that another reason why Bhutanese do not opt local products was because of the perceived poor quality.

The Bhutan Standard sBureau (BSB) certifies all the construction materials that are locally produced, he said. “If the quality of the products are inferior, it would not be in the market. Today, if two products, imported and locally manufactured are compared, I’m sure the local products would be better.”

Another manufacturer who requested anonymity said that despite all the advantages local manufacturers enjoy in the form of land lease and tax holidays, the lack of awareness among public and limited market nullifies all these investments made by the government in the cottage and small industry (CSI) sector.

“Realising how much we are reliant on import, it is our sincere effort to change and break this age-old believe that only imported goods are of better quality and cheaper,” he said. “But I don’t know how and why our efforts have not materialised and where we have gone wrong in convincing our own people.”

He said that the Pasakha industrial area alone has more than 39 operational industries producing almost everything that is being imported today.

One of the common feedback manufacturers receive is that their products are not ‘time-tested’ and do not guarantee long-term durability.

Manufacturers claimed that without even giving them an opportunity to showcase their product’s worth, it was not fair to judge their products on assumptions.

Nidup of Tashirabtseg concrete brick manufacturing unit in Nganglam said that lack of awareness among the public on local products is one of the main challenges manufacturers faced.

Also, lack of monitoring and implementation of regulations further facilitates the import of construction materials, he said. “There has been several executive orders from the government to use locally produced material, none of these orders are being practiced today.”


The push

Local manufacturers claimed that while the government has been supporting CSI and private sector growth, a ‘push’, they said was required to boost the CSI and private sector.

Tshering Kibu of Yarab Pvt Ltd in Phuentsholing said that like the rest of the local manufacturers, her company was also competing with Indian giants in the construction sector.

She said that the only possible way to promote local manufacturers was for the government to prioritise local materials in the tender documents and the bill of quantities (BoQ).

“There are some BoQs where the procuring agencies directly reflect the Indian brands to be used in a project,” she said.  “The same can be done for Bhutanese local products.”

Phuntsho Tenzin said that the government and relevant agencies should also facilitate the listing of all local products onto the Bhutan Standard Rate (BSR), which is a prerequisite of qualifying into a BoQ in a tender document.

“Once the BSB certifies our products, there should be ways to automatically qualify the products into the BSR and then to the BoQ,” he said. “Because most of our products are not listed on the BSR, we do not qualify in the tendering process despite being certified by BSB.”

He added that in the existing tendering process, procuring agencies use the term ‘equivalent’, which leaves options open for the contractors to opt for import.

“A wire nail equivalent of BSB certification could be anything less than our product. Therefore, we are requesting the government to help prioritise the local products, which would then help curb imports drastically.  We produce almost all construction materials that have been imported for decades.”